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Introduction

Explored and settled by the Spanish in the 16th century, Panama broke with Spain in 1821 and joined a union of Colombia, Ecuador, and Venezuela - named the Republic of Gran Colombia. When the latter dissolved in 1830, Panama remained part of Colombia. With US backing, Panama seceded from Colombia in 1903 and promptly signed a treaty with the US allowing for the construction of a canal and US sovereignty over a strip of land on either side of the structure (the Panama Canal Zone). The Panama Canal was built by the US Army Corps of Engineers between 1904 and 1914. In 1977, an agreement was signed for the complete transfer of the Canal from the US to Panama by the end of the century. Certain portions of the Zone and increasing responsibility over the Canal were turned over in the subsequent decades. With US help, dictator Manuel NORIEGA was deposed in 1989. The entire Panama Canal, the area supporting the Canal, and remaining US military bases were transferred to Panama by the end of 1999. In October 2006, Panamanians approved an ambitious plan (estimated to cost $5.3 billion) to expand the Canal. The project, which began in 2007 and could double the Canal's capacity, is expected to be completed in 2014-15.

elections: president and vice president elected on the same ticket by popular vote for five-year terms (not eligible for immediate reelection; president and vice president must sit out two additional terms (10 years) before becoming eligible for reelection); election last held on 3 May 2009 (next to be held in 2014)

Democratic Change or CD [Ricardo MARTINELLI]; Democratic Revolutionary Party or PRD [Francisco SANCHEZ Cardenas]; Nationalist Republican Liberal Movement or MOLIRENA [Sergio GONZALEZ-Ruiz]; Panamenista Party [Juan Carlos VARELA Rodriguez] (formerly the Arnulfista Party); Patriotic Union Party or UP (combination of the Liberal National Party or PLN and the Solidarity Party or PS)[Anibal GALINDO]; Popular Party or PP [Milton HENRIQUEZ] (formerly Christian Democratic Party or PDC)

Chamber of Commerce; National Civic Crusade; National Council of Organized Workers or CONATO; National Council of Private Enterprise or CONEP; National Union of Construction and Similar Workers (SUNTRACS); Panamanian Association of Business Executives or APEDE; Panamanian Industrialists Society or SIP; Workers Confederation of the Republic of Panama or CTRP

divided into four, equal rectangles; the top quadrants are white (hoist side) with a blue five-pointed star in the center and plain red; the bottom quadrants are plain blue (hoist side) and white with a red five-pointed star in the center; the blue and red colors are those of the main political parties (Conservatives and Liberals respectively) and the white denotes peace between them; the blue star stands for the civic virtues of purity and honesty, the red star signifies authority and law

Economy

Panama's dollar-based economy rests primarily on a well-developed services sector that accounts for three-quarters of GDP. Services include operating the Panama Canal, logistics, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Economic growth will be bolstered by the Panama Canal expansion project that began in 2007 and is scheduled to be completed by 2014 at a cost of $5.3 billion - about 25% of current GDP. The expansion project will more than double the Canal's capacity, enabling it to accommodate ships that are too large to traverse the existing canal. The United States and China are the top users of the Canal. Panama also plans to construct a metro system in Panama City, valued at $1.2 billion and scheduled to be completed by 2014. Panama's booming transportation and logistics services sectors, along with aggressive infrastructure development projects, will likely lead the economy to continued growth in 2011. Strong economic performance has not translated into broadly shared prosperity, as Panama has the second worst income distribution in Latin America. About 30% of the population lives in poverty; however, from 2006 to 2010 poverty was reduced by 10 percentage points, while unemployment dropped from 12% to 6% of the labor force. Panama and the United States signed a Trade Promotion Agreement in June 2007, which, when implemented, will help promote the country's economic growth. Seeking removal from the Organization of Economic Development's gray-list of tax havens, Panama has also recently signed various double taxation treaties with other nations.

international: country code - 507; landing point for the Americas Region Caribbean Ring System (ARCOS-1), the MAYA-1, and PAN-AM submarine cable systems that together provide links to the US and parts of the Caribbean, Central America, and South America; satellite earth stations - 2 Intelsat (Atlantic Ocean); connected to the Central American Microwave System (2008)

on 10 February 1990, the government of then President ENDARA abolished Panama's military and reformed the security apparatus by creating the Panamanian Public Forces; in October 1994, Panama's Legislative Assembly approved a constitutional amendment prohibiting the creation of a standing military force but allowing the temporary establishment of special police units to counter acts of "external aggression"

Transnational Issues

current situation: Panama is a source, transit, and destination country for women and children subjected to sex trafficking and forced labor; although some Panamanian women and girls are subjected to sex trafficking in other countries in Latin America and in Europe, most Panamanian trafficking victims are exploited within the country; commercial sexual exploitation of children was greater in rural areas; Panamanian children, mostly young girls, are subjected to domestic servitude; most foreign trafficking victims are adult women from Colombia, neighboring Central American countries, and the Dominican Republic; some victims migrate voluntarily to Panama to work but are subsequently forced into prostitution or domestic servitude

tier rating: Tier 2 Watch List - authorities established a commission which drafted comprehensive anti-trafficking legislation to bring anti-trafficking laws in line with the 2000 UN Trafficking in Persons (TIP) Protocol; the government identified at least 43 trafficking victims and prosecuted five sex trafficking offenders, and in partnership with civil society and foreign governments, provided training to Panamanian officials; however, Panama continued to lack prohibitions against forced labor in its penal code, and authorities did not convict any trafficking offenders; specialized victim services, particularly for adult victims, remained limited, and authorities did not report using proactive procedures to identify trafficking victims among detained migrants (2011)